If inflation remains at very high level and a recession remains likely, the economic situation resists better than expected.
by Eric Albert (London, Correspondence) and Béatrice Madeline
Finally the peak of inflation in the euro zone? After the United States, where the rate of prices increase has started to slow down, the same trend could be appearing on the old continent. The price increase reached 10 % over a year in November, compared to 10.6 % in October. This is the first reflux since June 2021 and a glimmer of hope that the crisis begins to stabilize. This statistic, published Wednesday, November 30 by Eurostat, joins a series of economic indicators in recent weeks which show that if growth slows down, and that a recession remains likely this winter, it resists rather better than expected.
This slight breathing on prices is the logical consequence of reflux on raw materials since mid-2022. The gas, which has reached historic records when Vladimir Putin began to close the valves this summer, went from a peak to almost 350 euros from the megawat-hour at the end of August in Europe at 136 euros currently. Oil has dropped by a third since its June peak. Another improvement: the bottlenecks in the supply chains, which multiplied when the COVVI-19 pandemic is released, gradually return to order.
Each of these prices remains very high compared to the average of previous years, but the shock is diminished. As a result, energy inflation in the euro zone, which was 41.5 % in October, is “only” 34.9 % in November. Nine countries – out of nineteen – have recorded a decline or stagnation of inflation during this month, including Germany, Spain and the Netherlands. In France, inflation is stable, at 7.1 %, according to the harmonized indicator (against 6.2 % for the national index), remaining the second lower in the euro zone. “We would not be surprised that inflation increases again in December or January [2023], because the figures are very volatile, but there is little doubt that it will drop quickly next year”, Estem Andrew Kenningham, economist at Capital Economics.
violent for households
Of course, the price shock for households is nonetheless violent. In the euro zone, wages increased by approximately 5.2 %, according to indeed estimates, a recruitment website. Or a loss of purchasing power of at least five points for households. The difficulties are amortized by state aid (price shield, allowances with the poorest households …), which have multiplied through the continent, but they remain real.
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